JLF Research Archive
Showing items 426 to 450 of 571
Six weeks into fiscal year 2005-06, the General Assembly has a budget proposal from the conference committee. It includes $17.2 billion in spending (up 7.9 percent from 2004-05), over $700 million in higher taxes and fees, and $681 million in extra collections. This spending is well above the governor's spending cap. A constitutional tax and expenditure limit would provide the best insurance against permanent tax increases from reckless spending.
Northeastern North Carolina is trying to reverse its economic misfortune with two large economic development projects that could pull $8.25 million from the General Fund. Proponents want to avoid the legacy of the Global TransPark, but studies used to justify the projects are based on similarly faulty assumptions. A proposed Advanced Vehicle Research Center draws on no existing regional strengths; an entertainment district relies on transforming the region’s tourism. The General Assembly should not fund either project. Members should be sure to read reports on similar proposals–and read them with skepticism.
From 2000 to 2005, while 105,000 North Carolinians lost jobs in the private sector, state and local government payrolls grew by 46,000 — an increase of 8.2%, 16th largest in the nation. N.C. state and local governments now have 710 employees per 10,000 residents — more than any other state of similar size, including Massachusetts.
In response to a widely cited study by the American Federation of Teachers, Harvard education professor Caroline Hoxby recently released a study of the academic proficiency of charter school students. Hoxby finds charter schools comparing favorably with regular public schools: "charter students are 5.2 percent more likely to be proficient in reading and 3.2 percent more likely to be proficient in math on their state’s exams."
Although state revenue estimates are growing at the rate of about $100 million each month, the North Carolina House managed to pass a $17.1 billion budget that requires even higher taxes than the Senate’s bill. Spending would grow 7.5 percent. Despite this, some representatives claim that the budget is a model of fiscal responsibility because it ties recurring funds to recurring obligations. Fiscal responsibility does not require $778 million in new taxes or $376 million in transfers and new fees. “Reverse logrolling” in the conference is the last best hope for the General Assembly to become responsible.
Once again, the American Lung Association's annual “State of the Air” report misleads the public by exaggerating the data and issuing “grades” meant more to scare than to inform. The ALA claims up to 900 percent more high-ozone days than actually occurred and gives F grades to counties that are having no problem meeting EPA guidelines.
The NC House is considering a bill to raise the state’s minimum wage to $8.50 an hour. While intended to help lower-income workers earn a “living wage,” the more likely result is to boost the earnings of some non-poor workers, including many teens and seasonal workers, while increasing the unemployment rate for many poor and minority workers. Employers will not hire people whose work efforts are worth less in the market than a government-imposed wage. A better policy to boost the earnings of entry-level workers would be to address their educational deficiencies.
Under the Senate’s proposed budget, real spending in the state will grow as quickly over the three years through fiscal year 2007, 13.2 percent, as it did in the three years through FY 2001. The late 1990s benefited from rapid economic growth that allowed the state to cut taxes while spending more. Gov. Mike Easley raised taxes to cover expenses while slowing growth to 0.2 percent in real terms through FY2003-04. Since then, the higher taxes have paid for renewed spending growth. Medicaid spending has expanded more rapidly than education or correction and is accelerating. Growth is faster still outside this core.
The budget proposals from the senate and governor return North Carolina to a path of rapid spending growth. Education and Medicaid continue to expand, but economic development joins them as an important growth area. Government spending on a per capita basis retreated after Fiscal Year 1999-2000, but will be 28 percent higher in FY2006-07 than it was in FY2002-03.
A broad coalition of lawmakers and policy groups favors fundamental changes in NC lobbying laws to require more disclosure, create "cooling off periods" before former officeholders can lobby, and restrict the value of personal gifts to public officials. Still, reformers are overlooking an important issue: the role that special-interest lobbying plays in distorting fiscal policy and stunting economic growth.
Senators deserve a great deal of credit for decisions in their proposed budget to limit dual eligibility for Medicaid and Medicare, reduce the number of teacher assistants in public schools, and remove General Fund support for some activities that should rely on receipts. These changes do not reflect an overall return to fiscal reationality, however. The Senate still increases spending by $1 billion, paid for with fund transfers and big tax hikes.
Freedom Budget 2005 continues the tradition of JLF alternative budgets that revise the governor’s Continuation and Expansion budgets. If an item is not included here, the authors accept the governor’s proposal. This includes all pay raises for state employees and some tax changes. The specific recommendations detailed in this report are made as additions or subtractions from Gov. Easley’s budget.
The NC General Assembly is considering creating a new commission to develop state policies to combat global warming. But the scientific issues involved are complex and unsettled. If North Carolina were to try to reduce greenhouse gas emissions it would have no meaningful impact on global climate or the health and well-being of North Carolinians. On the other hand it would destroy tens of thousands of jobs. In other words a greenhouse gas reuction policy would have only costs and no benefits.
A 2004 study on the academic impact and effectiveness of charter schools in North Carolina authored for the Terry Sanford Institute by Robert Bifulco and Helen Ladd reached some harsh conclusions regarding the performance of the charter schools. Using three different models that compare state end-of-grade (EOG) test scores for regular public school students and charter school students, Bifulco and Ladd conclude that North Carolina charter schools are not only failing to improve their students' academic performance, but are actually hurting it.
TEA-211, the federal US transportation program passed in 1998, resulted in a substantial improvement in overall road performance but at considerable cost, according to the 14th annual review of state highways by Professor David T. Hartgen, University of North Carolina at Charlotte.
Supporters of a proposed government lottery argue that it would be a welcome alternative to raising state taxes to fund education. But there is no evidence to suggest that politicians in lottery states use the proceeds to reduce other taxes. They just allow state budgets to grow. Also, properly understood, a state-run lottery does increase taxes — it creates a government gambling monopoly and then levies a steep tax on it.
The state of North Carolina and our governor, Mike Easley, received mediocre grades on two recent report cards. Tax increases that were to be temporary when passed in 2001, but which continue in the governor's budget through at least 2006, contribute to the low grades. The additional tax bracket and half-cent sales tax will have added nearly $1.9 billion between their original sunset and July 2007, while Gov. Easley's additional taxes will bring almost as much in FY2006-07 alone.
Governor Mike Easley says his budget for the 2005-2007 biennium is the model of fiscal prudence, but the numbers belie this. Spending increases nearly $1 billion to $16.9 billion. The governor claims $200 million in spending cuts, but they are far outweighed by the $741 billion in higher taxes. Tobacco Trust Fund transfers and unreserved credit balance close the rest of the $1.1 billion structural deficit. The General Assembly will need to be more forthright if it is to put real restraints on government growth.
Despite a $1.3 billion deficit, Gov. Mike Easley will propose up to 6 percent higher spending in his 2005-06 budget, even with small proposed savings in most agencies. Medicaid and education spending have grown rapidly, and will continue apace. Instead, the governor plans to keep the temporary half-cent sales tax and add a large cigarette tax to pay for higher spending. This is no way to address what the Fiscal Research Division calls a structural budget deficit.
States have three direct policy levers to control Medicaid growth: eligibility, services, and payments. North Carolina’s mix of policies has led to some of the highest costs in the South, but the Blue Ribbon Commission on Medicaid Reform would make it even costlier. Tennessee and Mississippi, the two Southern states with higher per capita costs in 2000, have since made significant changes. Georgia and Virginia present different ways to reduce costs, while a 2001 report for the General Assembly presented largely unexploited savings.
County and municipal governments provide many key services while taking in billions in revenue. Their roles grow ever greater as state government shifts more taxing power to localities to make up for money kept by the state. Still, finding comparative data is hard. That's why this report provides information of how much local government costs in every city and county in NC.
During the 2005 session, state lawmakers are expected to take up the issue of how to comply with court rulings in the Leandro case. It is important to discard widespread misperceptions. First, Leandro does not require taxpayers to spend more money on public education. Second, public-school funding does not differ significantly across counties when all spending is included. Third, the small gap that remains is shrinking, not growing, and is unlikely to explain differences in student outcomes. Finally, local funds are a reasonable way to compensate for elevated labor costs in counties with high housing prices.
North Carolina has the second-largest state-owned road system in the US, almost 79,000 miles. A study in 2000 for the John Locke Foundation using data from 1998 showed that the system was in quite poor shape on key indicators. Clearly, North Carolina is losing the battle on road conditions. The purpose of this analysis is to update the earlier study by gathering and reporting on road conditions for each county and determining how conditions in each county have changed since 1998.
A recent report published by the NC Center for Public Policy Research concludes that North Carolina is facing a crisis in teacher recruitment and retention. But neither the data on projected student enrollment growth nor teacher retention rates justify such a harsh assessment. Clearly teacher recruitment and retention is a challenge that will always have to be met. The best approach is to reward those teachers who best foster achievement and to differentiate salaries among teachers according to supply and demand conditions in different disciplines.
State lawmakers are scheduled to meet in Raleigh today to consider a package of tax breaks and other incentives designed to lure a Dell Computers plant to North Carolina. While politicians often portray such deals as necessary to promote growth and job creation, they serve to transfer resources from existing firms, sometimes even competitors, while failing to address tax and other problems afflicting businesses of all sizes in the state. A good place to start in improving the state’s business climate would be to reduce marginal tax rates.